KEY POINTS
- K33 analysts said Tuesday that spot Ether ETFs may snap up over 1 million ETH in the first 5 months
- JPMorgan analysts previously projected that spot ETH ETFs will lodge 'modest' inflows
- The funds will begin trading after the SEC approves the S-1 filings of issuers
The cryptocurrency industry is awaiting the U.S. Securities and Exchange Commission's (SEC) decision on when spot Ether (ETH) exchange-traded funds (ETFs) will start trading, but as early as now, some analysts are already optimistic about the funds' performance, including experts at digital assets analytics firm K33 Research.
In a Tuesday report, K33 analysts said spot ETH ETFs could see around $3 billion to as much as $4.8 billion in inflows during their first five months of trading. Based on current prices, the said figures are equal to around 800,000 to 1.26 million of Ether, the latter being some 1.05% of the asset's total supply.
K33 analysts also foresee Ether prices rising, as was the case with Bitcoin following the approval of spot BTC ETFs in January. "As seen in BTC, this monumental supply absorption shock should lead to price appreciation in ETH," said Vetle Lunde, a senior analyst at K33 Research.
The analysts said there is significant institutional demand in the U.S. for Ether, the native digital asset of the Ethereum blockchain, and this could mean spot ETH ETFs may also gain such interest. Institutional funds control 3.3% of the world's total supply of ETH. In comparison, Bitcoin ETFs now hold over 1 million BTC, or some 5% of the digital asset's circulating supply.
K33's projection is higher than that of JPMorgan analysts, who said last week that they are expecting a "modest" net inflow of around $1 billion to $3 billion in the scenario wherein the SEC approves the Ethereum ETFs for trading soon.
JPMorgan analysts are also less optimistic about the crypto market's initial reaction to the products, saying it is "likely to be negative" for several reasons. They said one of such factors that will affect the reaction to ETH ETFs negatively is the funds being only second to Bitcoin in the spot ETF scene.
Meanwhile, the SEC has not provided a timeline on when it will decide on the S-1 filings of Ether ETF applicants. However, Bloomberg analyst Eric Balchunas said the Wall Street regular may allow the funds to launch by the "end of June," but he sees early July as a more likely approval period.
The Ethereum community has long been pushing for more recognition, and the approval of spot ETH ETFs has paved the way for both the SEC and Bitcoiners to realize the crypto industry is "not just about" Bitcoin.
